Understanding the Nexus Between Imports, Growth, Export and Foreign Debt Dynamics of an Emerging Market: The Case of Turkiye

Abstract

In economic research, the trade deficit in developing countries has consistently been a critical and chronic issue. The examination of imports, which is the primary cause of the trade deficit, is of great importance in this regard. This study has a goal to identify the determinants of imports. Turkiye, as a country that has been grappling with the challenges of being classified as a developing nation for years, has consistently experienced imports surpassing exports. For developing countries like Turkiye, debts and economic growth are as important as the concepts of trade deficit and imports. This study aims to examine the effects of industrial production, the private sector’s external debt trend, and exports as proxies for growth on Turkiye’s imports. Time series data covering from January 2005 to December 2023 was used in the study. The Autoregressive Distributed Lag (ARDL)  method is utilized to identify cointegration among variables, followed by causality analyses employing the Toda-Yamamoto method to enhance the research findings. The results revealed that independent variables are cointegrated with imports. Additionally, production, exports, and debts are identified as Granger causes of imports. These results are of critical importance in demonstrating that Turkiye’s exports and production are also dependent on imports.